Before I start, I will deal directly with the comments of the noble Baroness, Lady Chapman, which I thought were a little unfair. We have responded to a number of the points she has made, and we have adopted some of her suggestions on transparency, delivery partners and regional funding. We obviously have not gone as far as she would like in some respects, but it is slightly unfair to say that we have not listened at all to many of the reasonable suggestions that have been put forward from all sides. I will come on to another suggestion that we will adopt shortly.

I start by responding to the amendments put forward my noble friend Lady Noakes. I thank her once again for her considered contributions, which, together, aim to ensure that ARIA is a well-governed and effective agency. I certainly echo the comments of the noble Baroness, Lady Chapman, about her great knowledge of corporate governance. My noble friend’s Amendment 16 would remove the Secretary of State’s power to determine a pension or gratuity for non-executive members. As I said in Committee, it is in fact not our intention to offer these for ARIA’s non-executive members. In consequence of the helpful suggestions and debates we had on that occasion, I have reflected further on the functions of ARIA and the duties and responsibilities we expect of its non-executive members, and I am pleased to be able to confirm to my noble friend that we do not see circumstances in which this power will be required. I am therefore able to say that the Government will support this amendment, and I thank my noble friend again for bringing it forward.

I turn to Amendment 15, also tabled by my noble friend Lady Noakes, who spoke about reducing the maximum possible number of executive members from five to four. The chair of the agency will have responsibility for appointing ARIA’s executive members. Following government guidance for corporate governance, we will set out the responsibilities for ARIA’s chair to review the performance of ARIA’s board and its members in the framework document. This will include evaluating the composition of the board and considering its size, diversity and balance of experience and skills. We expect that, in the initial phases of ARIA, this will tend towards a small board structure. However, I believe that it is important to retain at least some flexibility in the legislation to account for ARIA’s future needs as appropriate, and to allow for a slightly larger board if necessary.

As ARIA will be working across the public and private sectors, using a range of funding mechanisms and funding research at various stages of technological development, I do not think we should rule out a slightly larger arrangement so that ARIA can bring knowledge from a range of backgrounds and ensure that this is represented at board level. I thank my noble friend for her thoughtful remarks on groupthink; it is this diversity of thought and experience that would be the best antidote to such an outcome.

Again, it will be the chairman’s responsibility to consider the best overall balance and composition for an exemplary board to lead this new and unique agency. Clearly, having an experienced and effective chairman is crucial for the good governance of ARIA, as it is for any other organisation, and we will be running the recruitment campaign for such a candidate shortly.

Turning to Amendment 18, also from my noble friend Lady Noakes, I agree that the quorum for ARIA should ensure a Majority non-executive presence, as far as is practicable. I believe it is most appropriate to follow the “Governance” section of the Treasury’s specimen framework document guidance and set this out in ARIA’s framework document, rather than on the face of the Bill. We will agree the right form of words with the new chairman when they are in post, so that this is implemented in a way that is practical for the organisation. For example, there may be four executive members and five non-executive members, and we will need to ensure that a quorum can be achieved if one non-executive member is absent because of illness, for example. This will allow the chairman some flexibility to determine how to deal with absences, such as making arrangements for proxy voting or duly authorised representatives, and this reflects back on the chairman’s duties to lead the board. I hope that my noble friend is therefore suitably reassured. We agree with the intention behind her Amendment 18, but believe it is best to implement this outside the Bill itself.

Amendment 17, tabled by the noble Lord, Lord Morse, sets restrictions for ARIA’s staff and its sponsorship team in BEIS in respect of working for any organisation that has received financial support from ARIA, for five years after terminating their contract. I know the noble Lord, Lord Morse, brings an extreme amount of expertise on this subject from his work as the Comptroller and Auditor-General at the National Audit Office, when he spread fear throughout civil servants—and Ministers, I might add—across Whitehall, he will no doubt be delighted to hear. I have carefully considered his 2015 report on conflicts of interest across government. The report discusses business appointments policy where individuals transferring from public to private sector roles may be associated with conflicts of interest.

Those working in ARIA’s sponsorship team will be civil servants and will therefore be required to comply with the Civil Service’s business appointments policy. For senior civil servants, rules apply until two years after leaving the Civil Service; for those below, they normally apply for one year after leaving. Before accepting new employment, individuals must consider whether an application to the Advisory Committee on Business Appointments, which provides advice to the Prime Minister, is required under the rules. There are several considerations, including whether civil servants have been involved in developing policy affecting their prospective employer.

As these rules do not consider non-civil servants, I can confirm that ARIA will be required to implement its own business appointments policy, which will be agreed with the new chairman once he or she is in post. I believe this is the appropriate mechanism for guarding against abuse of office, undue influence or profiteering. Alongside this, ARIA will be required to have a conflict of interest procedure, which, at a minimum, will require the declaration and evaluation of board members’ interests, so that anyone with a conflict of interest is therefore not involved in any financial or executive decision-making relating to that interest.

Noble Lords will also be aware that the Bill allows for the Secretary of State to set out ARIA’s conflict of interest procedures through regulations, as the noble Baroness, Lady Chapman, referred to, to give them a legislative footing if needed, and I shared draft regulations for illustrative purposes with Front-Bench colleagues and the Cross-Bench Convenor’s office last month. ARIA will also be required to set other necessary policies, including a whistleblowing policy and a gifts and hospitality policy. Those working for both ARIA and its sponsorship team in BEIS will be required to follow the procedures in place, so that decisions are not made with other or future interests or bias in their minds.

We should not indiscriminately deny talented people the chance to share their skills and experience where it can genuinely add value. It is not unlikely to expect those working in ARIA or its sponsorship team to have a passion for science and research. They may want to move on to interesting careers at a university, research institute or exciting tech start-up. I am concerned that such an amendment could deter talented people from applying for these positions, as it would limit their career prospects.

I thank the noble Lord, Lord Broers, for his earlier contribution to the discussion on the amendments in the first group. The noble Lord is right that we must keep and motivate brilliant people, to help to make a success of ARIA, rather than creating a culture of distrust among its employees right from the start. I also welcome the remarks from my noble friends Lord Bethell and Baroness Noakes in supporting that sentiment.

On a practical point, these employees’ future roles might be in an organisation that received funding from ARIA but in an entirely different department, role or project. Furthermore, ARIA’s sponsorship team will not be involved in assessing funding programmes. It is key to the model we are pursuing for ARIA that it will have the autonomy to make its own funding decisions. That will not be down to civil servants, the Government or Ministers.

With particular reference to proposed new sub-paragraph (3) of Amendment 17, even when ARIA’s staff wish to pursue future roles connected to the work that they did at ARIA, that could be extremely valuable for the outcomes that ARIA is being created to achieve, such as the generation of new technologies and businesses in the United Kingdom. For example, a programme manager will bring forward a proposal that they are passionate about developing at ARIA. At the end of the programme, they may develop a successful proof of concept, thanks to all the contractors involved. The programme manager is then keen to take the benefits of ARIA’s funding through to commercialisation with the company that was funded to develop the original work. Such an amendment would outright ban the collaborative and seamless funding of R&D that we should be encouraging between the public and private sectors.

Let us not forget that ARIA will be funding high-risk research, which may be in extremely niche fields, with very few people in the country working on it. We should capitalise on these networks, encourage them to work together and follow their ideas through to real outcomes, with processes in place to consider and act on any conflicts—but on a case-by-case basis.

I hope I have clearly illustrated the potentially damaging unintended consequences of placing such broad restrictions in legislation. I hope I have also assured noble Lords that ARIA will be required, as is any other arm’s-length body, to have clear and robust business appointments and conflict of interest policies in place. On the basis of the assurances that I have been able to provide, I request the noble Baroness to withdraw her amendment.